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E-mini Dow Rebound Meaningless Without Follow-Through Rally

By:
James Hyerczyk
Updated: Feb 7, 2022, 05:51 UTC

The main trend is down according to the daily swing chart, however, momentum is trending higher.

E-mini Dow Jones Industrial Average

In this article:

March E-mini Dow Jones Industrial Average futures edged higher on Friday after recovering from an early setback. The intraday rally was impressive, but it won’t mean anything if there is no follow-through to the upside on Monday.

The catalyst driving the volatility was a government report showing the U.S. economy created far more jobs than expected in January despite a surge in COVID-19 cases. The news pointed to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.

On Friday, March E-mini Dow Jones Industrial Average futures settled at 34978, up 7 or +-0.02%. This was up from an intraday low of 34668.

The upbeat report ended days of anxiety among economists and White House officials who had frantically tried to prepare the nation for a disappointing payrolls number.

The report was good for stocks because it suggests gaining control of inflation could take place without a recession.

The Dow was supported by shares of Salesforce.com, JPMorgan & Co and Goldman Sachs Group, which rose 3.04%, 2.60% and 2.43% respectively. Weighing on the blue chip average were shares of 3M Co, Walgreens and Procter & Gamble, which declined by 2.23%, 1.82% and 1.59%, respectively.

Daily March E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher.

A trade through 35590 will signal a resumption of the uptrend. A move through 33031 will signal a resumption of the downtrend.

The short-term range is 36832 to 33031. Its retracement zone at 34932 to 35380 is resistance. Inside this zone is minor resistance at 35129.

Another minor range is 33031 to 35590. Its retracement zone at 34311 to 34009 is the nearest potential downside target and support.

Short-Term Outlook

The direction of the March E-mini Dow Jones Industrial Average early Monday is likely to be determined by trader reaction to 34932 to 35380.

Look for an early downside bias on a sustained move under 34932. If this is able to generate enough downside momentum then look for the selling to possibly extend into 34668.

Taking out 34668 will indicate the selling pressure is getting stronger with 34311 to 34009 the next likely target.

Trying to generate upside momentum will be a labored event because of a series of potential resistance levels at 34932, 35129, 35380 and 35590.

Taking out the main top at 35590 will change the main trend to up. It could also trigger an acceleration to the upside.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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